Brent Crude Oil Calm Ahead of US Oil Rig Count Data
Brent Crude oil was hovering under the $40.00 level after recent oil price weakness and a new update from the International Energy Agency (IEA) sees further demand weakness in the oil market.
Concerns over the current growth picture in the world economy has forced the IEA to cut its demand forecast for oil in 2020, for the second month running. The IEA now sees a plunge of 8.4 million barrels per day, which is still higher than 8.1m bpd a month ago. The revised figure will see oil demand at its lowest level in seven years.
In the latest monthly report, the IEA warned that the recovery in oil demand is now slowing and this has been a factor in the recent drop in oil prices in the U.S. and U.K. The agency saw a resurgence of Covid-19 cases in many European and international countries as the defining factor, with local lockdown measures, continued working from home and continued weakness in the airline and cruise sectors. At 91.7 mb/d, demand has returned to its level in 2013.
Data out of the U.K. also saw disappointing figures from the jobs market with an uptick in unemployment. This is happening despite the furlough scheme still being intact. Economic data from the U.S. tomorrow will see retail sales and the Federal Reserve’s interest rate decision and economic projections, so this will be a key driver of oil prices in the days ahead.
Brent Crude Oil Technical Outlook
Brent crude has dipped from the recent highs near $46.00 and is now looking to test the $40.00 prices again. The latest drop in the demand outlook will weigh on price, as will any resurgence in Coronavirus cases. Support for Brent comes in at $37.00 with further support around the $34.00 level.